Healthy eating hits biscuit sales

Healthier eating trends claimed another corporate casualty today after the maker of Fox’s biscuits faced up to “very disappointing” sales this year.

Northern Foods lowered profits expectations for the second time in two months as it said biscuit sales had fallen 12%, on a year earlier, in January and February while pastry products slipped 11% in the same period.

The Leeds-based company, which has more than 20,000 staff in the UK and Ireland, said it had begun a review of its product portfolio, but this move was not enough to prevent its share price tumbling by 17% today.

Britvic shares suffered a similar fate earlier this month after it disclosed that sales of Tango and Pepsi had been affected by the consumer trend towards “better for you” products.

As well as changing eating habits, Northern blamed its problems on price cutting and delays in securing price increases to offset energy cost rises. It supplies many of the UK’s major retailers, including Marks & Spencer, and features Goodfella’s pizza and Pork Farms pies in its portfolio.

The company has only recently completed a restructuring after merging 15 former operating units into three divisions and shutting two plants.

The chilled and bakery arms were the most affected by the downturn, with the Goodfella’s frozen foods division continuing to perform well.

In chilled, which supplies ready meals and other savoury products, sales of pastry items were 11% lower and reflected “changing eating products in certain product areas”, Northern said.

Across the group, Northern said underlying sales were flat in the first two months of the year, compared with a 3% improvement in the previous nine months.

Northern now expects profits for the year to April 1 to be in the region of £45m (€65.2m), compared with £62.2m (€90.2m) a year earlier. It also lowered profits expectations in January.

The Fox’s division employs around 3,000 people, including at sites at Batley, Kirkham and Uttoxeter. The Pork Farms Bowyers business has factories at Nottingham and Trowbridge.